Showing posts with label Plantation Sector News. Show all posts
Ageing oil palm plantations likely to lift CPO price
PETALING JAYA: Anticipation over declining crude palm oil (CPO) production due to ageing plantations in major producing countries including Malaysia, would likely bolster the commodity to hit RM4,000 per tonne by second half of this year, according to industry players.
Malaysian Estate Owners Association president Boon Weng Siew who pegged the country's total planted area with palm trees of over 20 years old to between 30% and 40%, said many of the ageing palm trees in Malaysia were mostly under the smallholders' holdings.
Of the total CPO production, smallholders contributed the bulk at about 52% while the rest was from large plantation companies, according to the National Association of Smallholders.
Despite a RM7,000 per ha grant by the Government for smallholders to carry out replanting activities,
Boon said: “It was difficult to persuade them especially with the CPO price trading above RM2,000 per tonne over the past three to four years.
“What more with the CPO prices currently trading in the region of RM3,300 to RM3,370 per tonne.”
Boon, a veteran planter, said the reluctance to undertake active replanting activities could also be due to the “insufficient” grant to cover the entire replanting costs up to maturity period of about three to four years.
He pointed out that the actual replanting cost up to maturity period should be about RM12,000 per ha given the current high costs of fertiliser and pesticides.
On the country's average yields, Boon said the current national average was about 20.2 tonnes of fresh fruit bunches (FFB), 20% oil extraction rate (OER) and about four tonnes of CPO per ha.
“At the current replanting rate, it is actually difficult to comprehend how Malaysia can achieve its vision for palm oil, i.e. 35 tonnes of FFB, 25% OER and 8.75 tonnes of CPO per ha per year by 2020,” he added.
The Malaysian Palm Oil Board (MPOB) had in early January said eight entry-point projects (EPPs) under the Government's Palm Oil NKEAshowed commendable achievements in meeting the targets set in 2011, the first year of its implementation.
For EPP1 in the upstream sector, the area of backlog cleared by plantations and organised smallholders, achieved 83.2% or 83,200ha last year, compared with 100,000ha in the earlier target.
Areas of new planting and replanting by smallholders reached 74.6% of the total 26,600ha. Of the total application for 37,432.64ha, about 29,995.09ha were approved and verified, said MPOB.
MPOB said oil palm felled and replanted was at 19,768.54ha last year where 8,429ha were for new planting and 11,338.92ha for replanting.
Meanwhile, United Malacca Bhd chief executive officer Dr Leong Tat Thimsaid replanting should be taken seriously given the high ageing profile of oil palm trees especially those over 25 years othat tended to drag the yields lower.
“In well established estates, I believe that replanting accounts for 2% to 5% of total planted area annually,” he said.
Leong estimated that the current replanting cost to maturity for most plantations could range from RM10,000 to RM13,000 per ha.
“Older palm trees are taller thus making harvesting very difficult. What more with local planters currently facing serious shortage of foreign fruit harvesters.”
He opined that the stagnating average yield performance in Malaysia among others was due to the conversion of the “hilly” rubber areas into oil palm plantations some 20 years ago.
Meanwhile, Standard Chartered Bank in its global research report “Crude palm oil - A price storm is brewing” said a severe structural slowdown in palm oil output was under way.
“The downtrend will worsen over the coming seasons with the deceleration in palm output caused largely by the ageing profile of estates in South-East Asia, which accounts for over 90% of the market, as well as sub-optimal farming practices across much of the region.
“Our conservative estimate is that more than 20% of trees in Malaysia are over 25-years-old. In reality, this could be more,” said the report.
Its long-term bullish view on CPO, relatively accommodative global interest rates and a deteriorating age profile of trees in Malaysia, should help to convince planters that replanting decision is best not to be delayed.
“We also believe there is a price storm brewing in the industry due to a deceleration in yields, the severity of which will be bullish for the market,” it added.
StanChart has forecast the annual average CPO price this year at RM3,450 per tonne. It has also revised second quarter (Q2) 2012 CPO price to RM3,500, Q3 at RM3,350 and Q4 at RM3,700 respectively.
As of 5.30pm yesterday, the benchmark third-month CPO futures contract for July was traded at RM3,373 per tonne, up RM13 from RM3,360 per tonne on Monday. - The Star Biz
Wednesday May 9, 2012
Mistry restates RM4,000 palm oil forecast
Palm oil may gain 15 per cent by the end of June, according to Godrej International Ltd’s Dorab Mistry, restating a year-long call for a rally to RM4,000 (US$1,302) a metric ton after prices dipped.
“I am very happy to reiterate my forecast,” Mistry said in an e-mailed response to questions. The Godrej director, who’s correctly forecast price trends over the past year, has been predicting a rally to that level since at least March 2011.
Wilmar International Ltd, the world’s biggest palm-oil processing company, is Mistry’s favorite palm stock, he said.
While prices in Malaysia have climbed 9.5 per cent this year, in line with Mistry’s outlook, they’ve fallen 4.2 per cent since April 10 amid concern the global recovery may be at risk as economic growth in China slows and the European debt crisis worsens. Shares in Wilmar International, which have dropped over the past 12 months, are “good value,” he said.
Palm oil for July delivery ended little changed at RM3,477 on the Malaysia Derivatives Exchange yesterday, the lowest close for the most-active contract since March 30. That’s down from a 13-month high of RM3,628 on April 10.
“Currently, the macro picture is undergoing a reassessment and that has led some players to de-risk,” said Mistry, who’s traded palm oil for more than three decades. “This sentiment changes from time to time, and as time goes by, each such change lasts for a shorter duration. Time will tell.”
Last year, Mistry predicted that the price of the world’s most-consumed cooking oil, which is used to make instant noodles and candy, would bottom out at about RM2,800 before rebounding. Its lowest price was RM2,754 on Oct. 6. Chandran Sinnasamy, trading head at Kuala-Lumpur based LT International Futures (M) Sdn, said last month that his views are respected by the industry.
China, the biggest user of cooking oils, reported lower- than-expected gross domestic product growth in the first quarter, raising concern that commodity demand may slow. Europe’s resurgent debt crisis has also roiled equity and commodity markets as government bond yields climbed.
Production of palm oil in Malaysia and Indonesia in January and February fell slightly short of forecasts, Mistry said in a speech in Beijing on March 27. The two countries are the world’s largest producers.
March, Malaysian production was 1.21 million tons, according to the nation’s palm oil board. That’s 14 per cent lower than a year ago and 2.1 per cent more than February. Malaysia had a so-called high cycle of production in 2011, resulting in record output of 18.9 million tons. A so-called low cycle that began in January meant output would range between 18.6 million and 19 million tons in 2012, Mistry said March 7.
The ratio of global stockpiles to demand for nine edible oils, including soy and palm, may drop this year to the lowest level since 1977 as drought hurt soybean crops in South America, according to data from the U.S. Department of Agriculture.
“At current prices, Wilmar looks very good value,” said Mistry. “They have by far the most balanced and diversified palm portfolio split between upstream, processing and FMCG,” he said, referring to fast-moving consumer goods. While Singapore- listed Wilmar is one of Godrej’s suppliers, he doesn’t own the company’s stock, Mistry said.
Wilmar shares ended at S$4.89 yesterday, valuing the company at S$31.3 billion (US$25 billion). They’ve dropped 7.2 per cent over the past year, and 2.2 per cent in 2012. Of the 30 analysts’ calls tracked by Bloomberg, there are 11 “buy” recommendations and 14 “holds” on Wilmar stock. -- Bloomberg
Large plantation companies in Malaysia can become the new Petronas of the greentech industry
Malaysia has the potential to become one of the global leading suppliers in green technology parts and components for green technology-based companies worldwide.
Malaysian-German Chamber of Commerce and Industry (MGCC) general manager Thomas Brandt said however, not much had been done by the country to elevate itself to that position.
He said by now, there should be better coordination and concerted efforts between ministries and relevant agencies to promote Malaysia as a hub for greentech companies.
“The local small and medium-scale enterprises will benefit in terms of technology transfer from multinational corporations involved in greentech activities,'' Brandt told StarBizWeek after a briefing on the upcoming Intersolar 2012 here yesterday.
Brandt said Malaysia was the fourth largest producer of solar cells in the world although it had not been actively promoting solar power usage.
He said Malaysia's lack of commitment in this area had dampen the interest of many foreign greentech companies and investors. “If no immediate steps are taken to address the issue, Malaysia risks losing out to other countries in the region especially Indonesia, Singapore and Thailand.''
He said Singapore was ahead in the region when it comes to the greentech industry, while Indonesia and Thailand were actively attracting foreign investors to their shores.
Barndt said the greentech industry was a multi-billion dollar industry as countries all over the world were now looking at new energy sources including renewable energy.
He said Malaysia could fully exploit solar power due to its sunny conditions and produce renewable energy from oil palm-based biomass. “Large plantation companies in Malaysia can become the new Petronas of the greentech industry,” added Brandt.
Meanwhile, the upcoming Intersolar 2012, which will be held in Munich, Germany is slated to be the world's largest gathering of manufacturers, suppliers, distributors, utility and service companies in solar business as it expects the participation of 2,400 exhibitors and 80,000 visitors from 150 countries.
From: The Star
From: The Star
